<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Occusystems, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Occusystems, Inc.
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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Notes:
<PAGE>
[OCCUSYSTEMS, INC. LOGO APPEARS HERE]
3010 LBJ FREEWAY, SUITE 400
DALLAS, TEXAS 75234
April 3, 1997
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
OccuSystems, Inc., to be held at 1:00 p.m. on Wednesday, May 7, 1997, at the
Holiday Inn, 4441 Highway 114 and Esters Boulevard, Irving, Texas 75063.
The Board of Directors appreciates your interest in the Company.
Regardless of whether you plan to attend the meeting, it is important that your
shares be represented. Please sign, date, and mail the enclosed proxy in the
envelope provided at your earliest convenience.
Sincerely,
John K. Carlyle Daniel J. Thomas
Chairman of the Board and President and
Chief Executive Officer Chief Operating Officer
<PAGE>
OCCUSYSTEMS, INC.
3010 LBJ FREEWAY, SUITE 400
DALLAS, TEXAS 75234
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1997
Notice is hereby given that the Annual Meeting of the Stockholders (the
"Annual Meeting") of OccuSystems, Inc., a Delaware corporation (the "Company"),
will be held at the Holiday Inn, 4441 Highway 114 and Esters Boulevard, Irving,
Texas 75063, on Wednesday, May 7, 1997, at 1:00 p.m., C.D.S.T., for the
following purposes:
1. To elect three (3) Class II directors, to serve until the expiration
of their terms and until their successors are elected and qualify;
2. To authorize and approve an amendment to the OccuSystems, Inc. 1995
Long-Term Incentive Plan to increase the number of shares of Common Stock for
which options and/or awards may be granted thereunder from 1,000,000 to
2,000,000;
3. To ratify the selection of the accounting firm of Arthur Anderson
LLP as independent public accountants for the Company for the fiscal year ending
December 31, 1997; and,
4. To transact such other business as may properly be brought before
the Annual Meeting.
The Board of Directors of the Company has fixed the close of business on
March 14, 1997, as the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting.
A form of Proxy, a Proxy Statement containing more detailed information
with respect to the matters to be considered at the Annual Meeting, and the
Company's 1996 Annual Report accompany this notice.
You are cordially invited to attend the Annual Meeting in person, but if
you are unable to do so, please complete, sign, date, and promptly return the
enclosed Proxy in the enclosed, pre-addressed, postage paid envelope. If you
attend the Annual Meeting and desire to revoke your Proxy and vote in person you
may do so. In any event, a Proxy may be revoked at any time before it is voted.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF EACH OF THE ABOVE
PROPOSALS NUMBERED 1-3.
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, PLEASE
COMPLETE, SIGN, DATE, AND MAIL PROMPTLY THE ENCLOSED PROXY, WHICH IS BEING
SOLICITED BY THE BOARD OF DIRECTORS, WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING. AN ADDRESSED RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES IS ENCLOSED FOR THAT PURPOSE.
By Order of the Board of Directors,
Richard A. Parr II
Secretary
Dallas, Texas
April 3, 1997
<PAGE>
OCCUSYSTEMS, INC.
3010 LBJ FREEWAY, SUITE 400
DALLAS, TEXAS 75234
972-484-2700
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
APRIL 3, 1997
The Annual Meeting of Stockholders (the "Annual Meeting") of OccuSystems,
Inc. (the "Company") will be held at 1:00 p.m., C.D.S.T. on Wednesday, May 7,
1997, at the Holiday Inn, 4441 Highway 114 and Esters Boulevard, Irving, TX
75063. This Proxy Statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of the Company for use at the
Annual Meeting and at any adjournments thereof.
Only stockholders of record at the close of business on March 14, 1997,
are entitled to vote at the meeting or any adjournments thereof. A list of all
stockholders entitled to vote at the Annual Meeting will be available for
inspection by any stockholder for any purpose reasonably related to the Annual
Meeting during ordinary business hours for a period of ten days prior to the
Annual Meeting at the Company's principal executive offices at 3010 LBJ Freeway,
Suite 400, Dallas, Texas 75234. At the record date, 21,576,898 shares of the
Company's common stock, par value $.01 per share ("Common Stock") were
outstanding. Each share of Common Stock entitles the owner to one vote. A
majority of the outstanding shares present in person or by proxy is required to
constitute a quorum to transact business at the meeting. If a quorum is not
present, the stockholders entitled to vote who are present in person or
represented by proxy at the Annual Meeting have the power to adjourn the Annual
Meeting from time to time, without notice other than an announcement at the
Annual Meeting, until a quorum is present. At any adjourned Annual Meeting at
which a quorum is present, any business may be transacted that might have been
transacted at the Annual Meeting as originally notified. Abstentions and broker
non-votes will be counted as present for purposes of determining whether a
quorum exists, but as not voted for purposes of determining the approval of any
matter submitted to the stockholders for a vote.
If the proxy is properly signed, returned to the Company, and not
revoked, it will be voted in accordance with the instructions contained therein.
Unless contrary instructions are given, the proxy will be voted in favor of
approval of all of the proposals to be considered at the Annual Meeting, and as
recommended by the Board of Directors with regard to all other matters or, if no
such recommendation is given, in the discretion of the proxy holders on such
other business as may properly come before the Annual Meeting.
A person giving their enclosed proxy has the power to revoke it at any
time before it is exercised. However, such revocation must be made in writing
and received by the Secretary of the Company at its principal executive offices
at 3010 LBJ Freeway, Suite 400, Dallas, Texas 75234 at or before the time and
date of the Annual Meeting. A stockholder may also attend the Annual Meeting
and vote in person, in which event any prior proxy given by the stockholder will
be automatically revoked.
The cost of soliciting proxies will be borne by the Company. Such
solicitation will be made by mail and in addition may be made personally or by
telephone by directors, officers, and employees of the Company, none of whom
will receive additional compensation for these services. The Company's
regularly retained investor relations firm, Corporate Communications, Inc., may
also solicit proxies by telephone and mail. Forms of proxies and proxy
materials will also be distributed through brokers, custodians, and other like
parties to the beneficial owners of Common Stock. The Company will reimburse
such parties for their reasonable out-of-pocket expenses incurred in connection
with the distribution.
The approximate date on which the Company is first sending this Proxy
Statement and form of proxy to stockholders is April 3, 1997. The Annual Report
of the Company for the fiscal year ended December 31, 1996, including
consolidated financial statements, accompanies this Proxy Statement.
1
<PAGE>
PROPOSAL ONE - ELECTION OF DIRECTORS
The Company's Board of Directors currently consists of seven members
divided into three classes, designated Class I, Class II and Class III.
Directors serve for staggered terms of three years each, except that initially
the Class I directors served until the Company's 1996 Annual Meeting of
Stockholders, the Class II directors will serve until the 1997 meeting and the
Class III directors will serve until the 1998 meeting.
At the 1997 Annual Meeting of Stockholders, three Class II directors will
be elected to a term expiring in 2000. One Class I position is unfilled. One
Class III position is unfilled. The Board of Directors has the authority under
the bylaws of the Company to elect additional directors during the year to fill
any vacant positions until the expiration of the term of the position thus
filled. At this time, the Board of Directors has no plans or commitments to
fill the vacant positions.
Management has designated each of the following individuals as nominees
for reelection at the Annual Meeting as Class II directors of the Company with
terms expiring 2000:
Robert W. O'Leary
Robert A. Ortenzio
Richard D. Rehm, M.D.
Proxies will be voted FOR the nominees listed above, unless otherwise
instructed. The affirmative vote of a plurality of the shares of Common Stock
cast at the 1997 Annual Meeting of Stockholders by the holders of the shares
entitled to vote thereon is required to elect the directors. It is expected
that the nominees will serve, if elected, but if for any unforeseen reason a
nominee should decline or be unable to serve, the proxies will be voted to fill
any such vacancy in accordance with the discretionary authority of the persons
named in the proxies. The proxies cannot be voted for a greater number of
persons than the number of named nominees.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE ELECTION OF
EACH OF THESE NOMINEES.
PROPOSAL TWO
AMENDMENT TO THE COMPANY'S 1995 LONG-TERM INCENTIVE PLAN
The Company has granted equity-based incentives as a key element of its
overall compensation program for employees of the Company. The Board of
Directors and the Option and Compensation Committee of the Board of Directors
believe that it is important to have such equity-based incentives available to
attract, motivate, and retain key employees with appropriate experience and
ability, and to increase the grantees' alignment of interest with the Company's
stockholders. Accordingly, the Board of Directors has approved, subject to
stockholder approval, an amendment to the Company's 1995 Long-Term Incentive
Plan (the "Incentive Plan"), increasing by 1,000,000 the number of shares of the
Company's Common Stock reserved for issuance under the Incentive Plan. A
description of the Incentive Plan is set forth under "Compensation Plans - 1995
Long-Term Incentive Plan."
Currently, a maximum of 1,000,000 shares of Common Stock may be issued
pursuant to awards granted under the Incentive Plan as adopted by the Company's
stockholders in 1995. Of that number, 78,625 shares remained available for
grant under the Incentive Plan as of March 14, 1997. The proposed amendment
would increase the number of shares available under the Incentive Plan by
1,000,000 (to a maximum of 2,000,000). Specifically, the proposed amendment
would amend Section 2.1 of the Incentive Plan by replacing the number
"1,000,000" with the number "2,000,000."
The affirmative vote of a majority of the shares of Common Stock present
or represented and entitled to vote at the Annual Meeting will be required to
approve the proposal.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE AMENDMENT
TO THE INCENTIVE PLAN.
2
<PAGE>
PROPOSAL THREE
SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The firm of Arthur Andersen LLP, Dallas, Texas, has been retained by the
Company as independent public accountants to audit the financial statements of
the Company for the fiscal year ending December 31, 1997, subject to stockholder
approval. Arthur Andersen LLP has been the Company's auditor since 1993.
Representatives of Arthur Andersen LLP will be present at the Annual Meeting and
will be afforded the opportunity to make a statement if they desire to do so and
to respond to appropriate questions.
The affirmative vote of a majority of the shares of Common Stock present
or represented and entitled to vote at the Annual Meeting will be required to
ratify the Company's selection of Arthur Andersen LLP as the Company's
independent public accountants.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
RATIFICATION OF THE SELECTION OF ARTHUR ANDERSEN LLP.
3
<PAGE>
DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table provides information regarding the Company's
directors and executive officers:
John K. Carlyle 42 Chairman, Chief Executive Officer, and Director
Daniel J. Thomas 38 President, Chief Operating Officer, and Director
Richard A. Parr II 38 Executive Vice President, General Counsel, and
Secretary
James M. Greenwood 36 Senior Vice President, Chief Financial Officer,
and Treasurer
W. Thomas Fogarty, M.D. 49 Senior Vice President and Chief Medical Officer
Richard D. Rehm, M.D. 51 Director
Stephen A. George, M.D. (1) 45 Director
Robert W. O'Leary 53 Director
Robert A. Ortenzio (2) 39 Director
Paul B. Queally (1)(2) 33 Director
- ----------
(1) Member of the Audit Committee
(2) Member of the Option and Compensation Committee
The Board of Directors is divided into three classes and is presently
comprised of seven members. The directors of each class are elected for three-
year terms, with terms of the three classes staggered so that directors from a
single class are elected at each annual meeting of stockholders. Stephen A.
George, M.D., and Daniel J. Thomas are Class I directors whose terms of office
expire at the annual meeting of stockholders in 1999. Robert W. O'Leary, Robert
A. Ortenzio, and Richard D. Rehm, M.D., are Class II directors whose terms of
office expire at this Annual Meeting. John K. Carlyle and Paul B. Queally are
Class III directors whose terms of office expire at the annual meeting of
stockholders in 1998.
Executive officers are generally elected annually by the Board of
Directors to serve, subject to the discretion of the Board of Directors, until
their respective successors are appointed. A brief biography as of each
director and executive officer of the Company follows. The information given in
this Proxy Statement concerning the nominees and other directors is based upon
statements made or confirmed to the Company by or on behalf of each such nominee
and director, except to the extent certain information appears in the Company's
records.
John K. Carlyle has served as a director of the Company since 1991,
Mr. Carlyle has served as the Company's Chairman and Chief Executive Officer
since January 1, 1997. Mr. Carlyle joined the Company in 1990 as President and
served as the Company's President and Chief Executive Officer from 1991 through
December 1996. From 1985 to 1990, Mr. Carlyle served as Senior Vice President
and Chief Financial Officer of Medical Care International, Inc. ("Medical
Care"), an operator of outpatient surgical centers. Mr. Carlyle has served as a
director of National Surgery Centers, Inc., an owner and operator of
freestanding, multi-specialty ambulatory surgery centers, since 1991. He also
serves as a director of Heritage Health Systems, Inc., a developer and manager
of physician-driven integrated delivery networks and other private companies.
Mr. Carlyle is a certified public accountant.
Daniel J. Thomas has served as a director of the Company since January
1, 1997, when he was elected by the Board of Directors to fill the vacancy
created by the April 5, 1996 resignation of Richard W. Palczynski. Mr. Thomas
has also served as the Company's President and Chief Operating Officer since
January 1, 1997. From April 1993 through December 1996, Mr. Thomas served as
the Company's Executive Vice President and Chief Operating Officer. Prior to
joining the Company in 1993, Mr. Thomas served as controller of Medical Care
from 1987 to 1990 and as its Senior Vice President and Divisional Director from
1990 to 1993. Mr. Thomas is a certified public accountant.
Richard A. Parr II has served as the Company's Executive Vice
President, General Counsel, and Secretary since August 1, 1996. Prior to
joining the Company, Mr. Parr served as Vice President and Assistant General
Counsel of OrNda HealthCorp, a national hospital management company, from April
1993 through July 1996 and as Associate General Counsel of OrNda HealthCorp from
September 1991 through March 1993.
4
<PAGE>
James M. Greenwood has served as the Company's Chief Financial Officer
since he joined the Company as a Vice President in 1993. Mr. Greenwood has
served as a Senior Vice President of the Company since May 1994. From 1988
until he joined the Company in 1993, Mr. Greenwood served in numerous positions
with Bank One, Texas, N.A., and its predecessors, most recently as Senior Vice
President and Manager of Mergers and Acquisitions. Mr. Greenwood is a certified
public accountant.
W. Thomas Fogarty, M.D., has served as the Company's Senior Vice
President and Chief Medical Officer since September 1995. From 1993 to September
1995, Dr. Fogarty served as Vice President and Medical Director of the Company,
from 1992 to 1993, as a Regional Medical Director of the Company, and from 1985
until 1992, as a medical director of one of the Company's centers. Since 1985,
Dr. Fogarty has served as Vice President and Secretary of Occupational Health
Centers of the Southwest, P.A. ("OHCS"), an affiliate of the Company which
provides occupational medical services.
Richard D. Rehm, M.D., founded the Company in 1990 and served as its
Chairman of the Board from 1991 through December 1996. Since 1988, Dr. Rehm has
served as President and a director of OHCS. Dr. Rehm has owned, operated, and
developed occupational healthcare centers since 1979.
Stephen A. George, M.D., has served as a director of the Company since
1993. Dr. George is the founder of First Physician Care, Inc. ("First Physician
Care"), an owner and operator of multi-specialty medical clinics, and has been
its Chairman, President, and Chief Executive Officer since 1993. From 1990 to
1993, Dr. George was Vice President - Managed Care Operations and Chief Medical
Officer of Provident Life and Accident Insurance Company of America, a multi-
line insurance company. From 1988 to 1990, Dr. George was Vice President -
Medical Management and Chief Medical Officer of Lincoln National Life Insurance
Company, also a multi-line insurance company.
Robert W. O'Leary has served as a director of the Company since July
1995. Since March 1995, Mr. O'Leary has served as Chairman and Chief Executive
Officer of Premier, Inc., a voluntary healthcare alliance. From 1991 until
1995, Mr. O'Leary served as Chairman and Chief Executive Officer of American
Medical International, Inc., a healthcare facilities management company. From
1989 to 1991, Mr. O'Leary served as President and Chief Executive Officer of
Voluntary Hospitals of America, a national hospital alliance. Previously, Mr.
O'Leary served as the Chairman of i-STAT Corporation, a medical device
manufacturer.
Robert A. Ortenzio has served as a director of the Company since May
1992. Mr. Ortenzio has served as President of Select Medical Corporation, a
private healthcare company based in Mechanicsburg, Pennsylvania, since August,
1996. From 1986 to 1996, Mr. Ortenzio was employed by Continental Medical
Systems, Inc., a nationwide provider of rehabilitation services, from 1986 until
1988 as its Senior Vice President, from 1988 until June 1995 as its President
and Chief Operating Officer, and from July 1995 to August 1996 as its President
and Chief Executive Officer. Mr. Ortenzio also serves as a director of American
Oncology Resources, Inc., a physician practice management company, and of
Centennial HealthCare Corporation, a long-term care and specialty health care
services provider.
Paul B. Queally has served as a director of the Company since 1993.
Mr. Queally is a general partner of Welsh, Carson, Anderson & Stowe, an
investment firm specializing in the healthcare and information services
industries. From 1993 to 1996, Mr. Queally was a general partner of The Sprout
Group, a division of Donaldson, Lufkin & Jenrette Capital Corporation and prior
thereto an associate since 1986. Mr. Queally also serves as a director of
several private companies, including First Physician Care and Ortholink, Inc.,
an orthopedic physician practice management company.
5
<PAGE>
MEETINGS AND COMMITTEES OF DIRECTORS
During 1996, the Board of Directors of the Company held a total of
seven meetings, including four regular meetings and three special meetings.
With the exception of Mr. O'Leary, each director attended more than 75% of the
aggregate of (i) the total number of meetings held by the Board of Directors,
and (ii) the total number of meetings held by all committees of the Board of
Directors on which he served. Mr. O'Leary attended all of the regular meetings
of the Board of Directors, but attended fewer than 75% of the total number of
meetings of the Board of Directors during 1996.
The Board of Directors of the Company has established an Audit
Committee and an Option and Compensation Committee. The Audit Committee held
two meetings during 1996. The Audit Committee reviews the adequacy of the
Company's system of internal controls and accounting practices. In addition,
the Audit Committee reviews the scope of the annual audit of the Company's
independent public accountants, Arthur Andersen LLP, prior to its commencement,
and reviews the types of services for which the Company retains Arthur Andersen
LLP. The Option and Compensation Committee held one meeting in 1996. The
functions of the Option and Compensation are to: (1) establish annual salary
levels, approve fringe benefits, and administer any special compensation plans
or programs for officers of the Company, (2) review and approve the salary
administration program for the Company, and (3) administer the Company's
incentive and stock option plans. Stephen A. George, M.D. and Paul B. Queally
serve on the Audit Committee. Mr. Queally and Robert A. Ortenzio serve on the
Option and Compensation Committee.
6
<PAGE>
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
COMPENSATION OF DIRECTORS
The Company does not currently compensate, and does not anticipate
compensating, its directors for their services as directors, except that each of
the Company's non-employee directors receives automatic stock option grants to
purchase 5,000 shares of Common Stock annually. In addition, each of the
Company's directors receives reimbursement of all ordinary and necessary
expenses incurred in attending any meeting of the Board of Directors or any
committee of the Board of Directors.
COMPENSATION OF EXECUTIVE OFFICERS
The following table summarizes the compensation paid during fiscal
years 1994, 1995, and 1996 to the Company's Chief Executive Officer and to the
Company's five most highly compensated executive officers other than the Chief
Executive Officer who were serving as executive officers at the end of fiscal
year 1996 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation
Compensation Awards- All Other
------------ Options (1) Compensation
Name and Principal Position Year Salary ($) Bonus ($) # (2)($)
--------------------------- ---- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C>
John K. Carlyle................................. 1996 301,666 80,000 0 306
President and Chief Executive Officer (3) 1995 233,333 100,000 160,000 318
1994 185,000 40,000 80,000 206
Richard D. Rehm, M.D. .......................... 1996 260,000 50,000 0 864
Chairman of the Board (4) 1995 243,333 75,000 60,000 612
1994 200,000 35,000 50,000 522
Daniel J. Thomas................................ 1996 225,000 60,000 0 198
Executive Vice President 1995 193,333 75,000 100,000 214
and Chief Operating Officer (5) 1994 165,000 25,000 50,000 198
Richard A. Parr II.............................. 1996 79,166 35,000 50,000 66
Executive Vice President, 1995 --- --- --- ---
General Counsel, and Secretary (6) 1994 --- --- --- ---
W. Thomas Fogarty, M.D.......................... 1996 200,000 40,000 0 522
Senior Vice President 1995 181,667 25,000 35,000 564
and Chief Medical Officer 1994 166,667 15,000 10,000 522
James M. Greenwood.............................. 1996 170,000 40,000 0 198
Senior Vice President 1995 128,365 50,000 70,000 115
and Chief Financial Officer 1994 110,000 15,000 20,000 161
</TABLE>
_____________________________________
(1) Options to acquire shares of Common Stock.
(2) Amount represents premiums paid by the Company for group term life insurance
that is taxable compensation to the Named Executive Officers.
7
<PAGE>
(3) As of January 1, 1997, Mr. Carlyle became Chairman and Chief Executive
Officer of the Company.
(4) Dr. Rehm resigned as Chairman of the Company effective December 31, 1997.
Dr. Rehm continues to serve as a Director of the Company.
(5) As of January 1, 1997, Mr. Thomas became President and Chief Operating
Officer of the Company.
(6) Mr. Parr joined the Company as Executive Vice President, General Counsel,
and Secretary on August 1, 1996.
OPTION GRANTS IN 1996
The following table sets forth certain information concerning grants of
stock options to each of the Company's Named Executive Officers during the
fiscal year ended December 31, 1996. In accordance with the rules of the
Securities and Exchange Commission, the potential realizable values under such
options are shown based on assumed rates of annual compound stock price
appreciation of 5% and 10% over the full option term from the date the option
was granted.
<TABLE>
<CAPTION>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
NUMBER OF % OF TOTAL VALUE AT ASSUMED
SECURITIES OPTIONS/SARS EXERCISE ANNUAL RATES OF STOCK
UNDERLYING GRANTED TO OR BASE PRICE APPRECIATION FOR
OPTIONS/SARS EMPLOYEES IN PRICE OPTION TERM(2)
GRANTED(#)(1) FISCAL YEAR ($/SHARE) EXPIRATION ------------------------
DATE 5%($) 10%($)
<S> <C> <C> <C> <C> <C> <C>
Richard A. Parr II 50,000 13.6% 25.88 07/26/06 813,632 2,061,904
</TABLE>
- ----------------------
(1) The vesting of each option is cumulative and no vested portion will expire
until the expiration of the option. These options vest over a four-year
period beginning on the date of the grant, with 25% of the options vesting
and becoming exercisable on each anniversary of the grant. All options will
vest immediately upon the occurrence of a change in control triggering
event, which includes a consolidation or merger of the stock of the Company,
or a sale of substantially all of the assets of the Company.
(2) These amounts represent certain assumed rates of appreciation only.
Actual gains, if any, on stock option exercises will depend upon the future
performance of the Common Stock.
8
<PAGE>
OPTION EXERCISES AND FISCAL YEAR END VALUES
The following table provides information about option exercises by the
Company's Named Executive Officers in the last fiscal year and the value
realized by them. The table also provides information about the number and
value of options held by the Named Executive Officers at December 31, 1996.
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options/SARs In-the-Money Options/SARs
Shares at Fiscal Year End (#)(3) at Fiscal Year End ($)(2)
Acquired on Value ------------------------- -------------------------
Name Exercise (#) Realized ($)(1) Exercisable Unexercisable Exercisable Unexercisable
---- ------------ --------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
John K. Carlyle 112,750 2,526,375 98,500 178,750 1,638,000 2,468,750
Richard D. Rehm, M.D. --- --- 157,500 77,500 3,443,750 1,332,500
Daniel J. Thomas 25,000 609,375 137,500 137,500 2,793,750 2,206,250
W. Thomas Fogarty, M.D. --- --- 38,725 39,575 722,912 532,638
James M. Greenwood 23,500 558,000 26,250 71,250 347,500 900,000
Richard A. Parr II --- --- 0 50,000 0 56,250
</TABLE>
______________________________
(1) Market value of underlying securities based on the closing price of the
Company's Common Stock on NASDAQ on the date of exercise, minus the
exercise price.
(2) Market value of securities underlying in-the-money options based on the
closing price of the Company's Common Stock on December 31, 1996 (the last
trading day of the fiscal year) on NASDAQ of $27.00, minus the exercise
price.
(3) Of the unexercisable shares, Messrs. Carlyle, Rehm, Thomas, Fogarty, and
Greenwood will be vested in an additional 53,750, 27,500, 62,500, 8,750, and
15,000 shares, respectively, on or before June 30, 1997.
OTHER COMPENSATION ARRANGEMENTS
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with John K. Carlyle,
Daniel J. Thomas, Richard A. Parr II, James M. Greenwood, and W. Thomas Fogarty,
M.D. Each of the agreements provides for the payment of base salary amounts,
bonuses at the discretion of the Company's Board of Directors, and participation
in any employee benefit plan adopted by the Company for its employees. The term
of the agreement for Mr. Carlyle is three years. The term of each of the
agreements for Messrs. Thomas, Parr, Greenwood, and Fogarty is two years. Each
of the agreements entitles each such individual to receive severance payments if
the Company terminates such individual's employment without cause or the
individual terminates his employment for good reason. Such severance payments
shall equal two years' base salary for Mr. Carlyle following a change in control
of the Company, one year's base salary for Mr. Carlyle prior to a change in
control of the Company, and one year's base salary for Messrs. Thomas, Parr,
Greenwood, and Fogarty whether prior or subsequent to such a change in control.
INDEMNITY AGREEMENTS AND LIMITATIONS ON DIRECTORS' LIABILITY
The Company has entered into indemnity agreements with each of its
directors and officers. Pursuant to these agreements, the Company will, to the
extent permitted under applicable law, indemnify these persons against all
expenses, judgments, fines, and penalties incurred in connection with the
defense or settlement of any actions brought against them by reason of the fact
that they are or were directors or officers of the Company or that they assumed
certain responsibilities at the direction of the Company.
In addition, the Company's Certificate of Incorporation provides for
certain limitations on director liability. The Company's Certificate of
Incorporation provides that no director of the Company shall be personally
liable to the Company or its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of the
director's duty of loyalty to the Company or its stockholders, (ii) for acts or
9
<PAGE>
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) in respect of certain unlawful dividend payments or
stock redemptions or repurchases, or (iv) for any transaction from which the
director derived an improper personal benefit. The effect of these provisions is
to eliminate the rights of the Company and its stockholders (through
stockholders' derivative suits on behalf of the Company) to recover monetary
damages against a director for breach of fiduciary duty as a director (including
breaches resulting from grossly negligent behavior), except in the situations
described above.
COMPENSATION PLANS
1995 LONG-TERM INCENTIVE PLAN
The Company may grant officers, directors and key employees awards with
respect to shares of Common Stock under the Company's 1995 Long-Term Incentive
Plan (the "Incentive Plan"). Awards under the Incentive Plan include (i)
incentive stock options qualified as such under United States federal tax laws,
(ii) stock options that do not qualify as incentive stock options, (iii) stock
appreciation rights ("SARs"), and (iv) restricted stock awards. The number of
shares of Common Stock that may currently be issued under the Incentive Plan is
1,000,000 shares. As of March 14, 1997, the Company had granted options under
the Incentive Plan to purchase 921,375 shares of Common Stock, 115,550 of which
options were vested as of March 14, 1997. Accordingly, the number of shares
currently available for additional awards under the Incentive Plan is 78,625.
The Board of Directors is now seeking stockholder approval to amend the
Incentive Plan to increase the number of shares of Common Stock that may be
issued thereunder from 1,000,000 to 2,000,000. See "Proposal Two - Amendment to
the Company's 1995 Long-Term Incentive Plan."
The Board of Directors or the committee administering the Incentive Plan
(the "Committee") determines the exercise price of each option granted under the
Incentive Plan. However, the exercise price for an incentive stock option must
not be less than the fair market value of the Common Stock on the date of grant.
Stock options may be exercised as the Committee determines, but not later than
ten years from the date of grant in the case of incentive stock options. At the
discretion of the Committee, holders may use shares of stock to pay the exercise
price, including shares issuable upon exercise of the option.
An SAR may be awarded in connection with or separate from a stock option.
An SAR is the right to receive an amount in cash or stock equal to the excess of
the fair market value of a share of the Common Stock on the date of exercise
over the exercise price specified in the agreement governing the SAR (for SARs
not granted in connection with a stock option) or the exercise price of the
related stock option (for SARs granted in connection with a stock option). An
SAR granted in connection with a stock option will require the holder, upon
exercise, to surrender the related stock option or portion thereof relating to
the number of shares for which the SAR is exercisable. The surrendered stock
option or portion will then cease to be exercisable. Such an SAR is exercisable
or transferable only to the extent that the related stock option is exercisable
or transferable. An SAR granted independently of a stock option will be
exercisable as the Committee determines. The Committee may limit the amount
payable upon exercise of any SAR. SARs may be paid in cash or stock, as the
Committee provides in the agreement governing the SAR.
A restricted stock award is a grant of shares of Common Stock that is
nontransferable or subject to risk of forfeiture until specific conditions are
met. The restrictions will lapse in accordance with a schedule or other
conditions as the Committee determines. During the restriction period, the
holder of a restricted stock award may, in the Committee's discretion, have
certain rights as a stockholder, including the right to vote the stock subject
to the award or receive dividends on that stock. Restricted stock may also be
issued upon exercise or settlement of option or SARs.
An award agreement under the Incentive Plan provides that, upon a change
of control of the Company and in the discretion of the Committee (1) the holder
of a stock option may be granted a corresponding SAR, (2) all outstanding SARs
and options may become immediately and fully vested and exercisable in full, and
(3) the restriction period on any restricted stock award may be accelerated and
the restriction may expire. In general, a
10
<PAGE>
change in control of the Company occurs in any of five situations: (1) a person
other than the Company, certain affiliated companies or benefit plans, or a
company a majority of which is owned directly or indirectly by the stockholders
of the Company becomes the beneficial owner of 50% or more of the voting power
of the Company's outstanding voting securities; (2) a majority of the Board of
Directors is not comprised of the members of the Board of Directors at the
effective date of the Incentive Plan and persons whose election as directors
were approved by those directors or their approved successors; (3) a person
described in clause (1) announces a tender offer for 50% or more of the
Company's outstanding voting securities and the Board of Directors approves or
does not oppose the tender offer; (4) the Company merges or consolidates with
another corporation or entity (whether the Company or the other entity is the
survivor), or the Company's stockholders approve such a merger or consolidation,
other than mergers or consolidations in which the Company's voting securities
are converted into securities having the majority of voting power in the
surviving company; or (5) the Company liquidates or sells all or substantially
all of its assets, except sales to corporations having substantially the same
ownership as the Company.
If a restructuring of the Company occurs that does not constitute a
change in control of the Company, the Committee may (but need not) cause the
Company to take any one or more of the following actions: (1) accelerate in
whole or in part the time of vesting and exercisability of any outstanding stock
options and SARs in order to permit those stock options and SARs to be
exercisable before, upon or after the completion of the restructure; (2) grant
each optionholder corresponding SARs; (3) accelerate in whole or in part the
expiration of some or all of the restrictions on any restricted stock award; (4)
if the restructure involves a transaction in which the Company is not the
surviving entity, cause the surviving entity to assume in whole or in part any
one or more of the outstanding awards under the Incentive Plan upon such terms
and provisions as the Committee deems desirable; or (5) redeem in whole or in
part any one or more of the outstanding awards (whether or not then exercisable
) in consideration of a cash payment, adjusted for withholding obligations. A
restructure generally is any merger of the Company or the direct or indirect
transfer of all or substantially all of the Company's assets (whether by sale,
merger, consolidation, liquidation or otherwise) in one transaction or a series
of transactions.
1992 OPTION PLAN
The Company's Stock Option and Restricted Stock Purchase Plan (the "1992
Option Plan"), which was approved by the Board of Directors of the Company in
1992 and subsequently amended on May 18, 1994, provides for the issuance of
incentive and non-qualified stock options and/or awards in the form of rights to
purchase up to 1,500,000 shares of Common Stock. Non-qualified stock options
and awards may be granted to full-time employees (including officers and
directors) of the Company or to part-time employees or persons performing
services for the Company. Incentive stock options may only be granted to full-
time employees of the Company. The Company has granted a total of 1,495,886
options and awards under the 1992 Option Plan, 540,937 of which options and
awards were vested as of March 14, 1997. Unexercised options and awards under
the 1992 Option plan are subject to adjustment if the outstanding shares of
Common Stock are increased or decreased or changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or of another corporation through a stock split, combination, reorganization,
merger, consolidation, or similar transaction. Options are not transferable
except by will or the laws of descent and distribution, and, during an
optionee's lifetime, may be exercised only the optionee.
The 1992 Option Plan is administered by the Option and Compensation
Committee of the Company's Board of Directors. The Option and Compensation
Committee has sole authority and discretion under the 1992 Option Plan to, among
other things, (i) select the employees who are to be granted options or awards,
(ii) determine exercise prices, (iii) determine the time or times and the
conditions subject to which options and awards may be made or exercised, (iv)
establish the number of shares of Common Stock subject to the options or awards,
(v) establish transfer restrictions and vesting provisions, (vi) determine the
form of consideration that may be used to purchase shares of Common Stock upon
exercise of any option or award, and (vii) establish any other terms,
restrictions and/or conditions applicable to options and awards not inconsistent
with the provisions of the 1992 Option Plan. The terms and conditions of each
option and award granted under the 1992 Option Plan is set forth in a written
agreement between the Company and the participant in such form as the Option and
Compensation Committee approves.
11
<PAGE>
OTHER OUTSTANDING OPTIONS AND WARRANTS
In addition to the options and awards granted under the 1992 Option Plan
and warrants to purchase 350,000 shares of Common Stock for $7.00 per Warrant
granted to Creditanstalt-Bankverein pursuant to execution of its credit facility
(of which 200,000 were unexercised as of March 14, 1997), the Company has issued
options or warrants to purchase an aggregate of 351,333 shares of Common Stock
pursuant to separate agreements between the Company and the holders thereof. The
275,000 options and warrants that are currently outstanding have an average
exercise price of $6.85 per share. All such options are subject to a four-year
vesting schedule. As of March 14, 1997, 237,000 of such options and warrants
were vested and outstanding and the remaining 38,000 options are scheduled to
vest by December 31, 1998. Notwithstanding the foregoing, if the Company is
party to a merger or consolidation (whether or not the Company is the surviving
entity in such transaction), then all unvested options and warrants will vest
and be exercisable on the date of such occurrence.
All such options and warrants are exercisable for a period ending on the
tenth anniversary of the date that the last option or warrant vests, and may not
be transferred without the prior written consent of the Company, except upon a
holder's death to his estate or heirs at law or beneficiaries under his will. If
the employment of Mr. Carlyle is terminated by the Company for cause, then all
vested but unexercised options and warrants held by him will lapse 30 days after
the date of such termination. If the employment of any other optionholder is
terminated for any reason, then all vested but unexercised options and warrants
held by such person will lapse 30 days after the date of such termination.
Unexercised options and warrants, and the exercise price thereof, are
subject to adjustment if the Company issues Common Stock for a consideration per
share less than the exercise price or if there is a subdivision or consolidation
of the Company's Common Stock, the payment of a stock dividend or other increase
or decrease in the number of shares of Common Stock outstanding, and the Company
does not receive compensation therefor. In addition, the number (and type) of
securities subject to an option or warrant are subject to adjustment if the
Company is party to a merger or consolidation.
401(k) Plan
The Company has a defined contribution retirement plan which complies
with Section 401(k) of the Internal Revenue Code. Substantially all employees,
including officers and directors who have completed three months of service are
eligible to participate in the plan. Effective July 1, 1996, the plan was
amended to reduce the service period to three months. Prior to the change, the
plan required a service period of six months. Employees may contribute amounts
up to a maximum of 15% of the employees' compensation. The plan provides that a
discretionary match of employee contributions may be made by the Company in cash
or stock. The Company has not made any matching contributions to the plan.
Deferred compensation is not segregated from the Company's other assets.
Employee Stock Purchase Plan
The Company has an Employee Stock Purchase Plan that permits
substantially all employees to acquire the Company's Common Stock at the end of
each period at a purchase price of 85% of the lower of the fair market value at
the beginning or the end of the participation period. Periods are semi-annual
and begin on January 1 and July 1 of each year. Employees may designate up to
15% of their base compensation for the purchase of Common Stock. The Option and
Compensation Committee administers the Employee Stock Purchase Plan.
12
<PAGE>
OPTION AND COMPENSATION COMMITTEE
REPORT ON EXECUTIVE COMPENSATION
EXECUTIVE COMPENSATION PHILOSOPHY
The Option and Compensation Committee of the Board of Directors is
composed entirely of outside directors. The Committee is responsible for setting
and administering the policies and programs that govern both annual compensation
and stock ownership programs for the executive officers of the Company. The
Company's executive compensation policy is based on principles designed to
ensure that an appropriate relationship exists between executive pay and
corporate performance, while at the same time motivating and retaining executive
officers.
EXECUTIVE COMPENSATION COMPONENTS
The key components of the Company's compensation program are base salary,
an annual incentive award and equity participation. These components are
administered with the goal of providing total compensation that is competitive
in the marketplace, rewards successful financial performance and aligns
executive officers' interests with those of stockholders. The Option and
Compensation Committee reviews each component of executive compensation on an
annual basis.
BASE SALARY. Base salaries for executive officers are set at levels
believed by the Option and Compensation Committee to be sufficient to attract
and retain qualified executive officers. Base pay increases are provided to
executive officers based on an evaluation of each executive's performance, as
well as the performance of the Company as a whole. While the Committee does not
establish a specific formula or target to determine base salaries, the Committee
considers the financial performance of the Company as compared to other
physician practice management companies.
In this regard, the Committee primarily considers earnings growth and to
a lesser degree asset growth. The Committee also considers the success of the
executive officers in developing and executing the Company's strategic plans,
developing management employees and exercising leadership. The Option and
Compensation Committee believes that executive officer base salaries for 1996
were lower than the average base salaries paid by companies such as those
included in the Company's peer group of physician practice management companies
(the "PPM Peer Group") and comparable to the median base salaries paid by
service industry companies with similar earnings.
This Committee does not currently intend to award compensation that would
result in a limitation on the deductibility of a portion of such compensation
pursuant to Section 162(m) of the Internal Revenue Code of 1986, as amended;
however, this Committee may in the future decide to authorize compensation in
excess of the limits of Section 162(m) if it determines that such compensation
is in the best interests of the Company.
ANNUAL BONUS. The Option and Compensation Committee believes that a
significant proportion of total cash compensation for executive officers should
be subject to attainment of specific Company earnings criteria. This approach
creates a direct incentive for executive officers to achieve desired performance
goals and places a significant percentage of each executive officer's
compensation at risk. Consequently, at the beginning of each year, the Option
and Compensation Committee establishes potential bonuses for executive officers
based on the Company's achievement of certain earnings per share criteria. The
Option and Compensation Committee established annual bonuses for 1996 varying
from 18% to 26% of base salaries, based upon the Company's achievement of
predetermined earnings per share criteria and including a discretionary
component. The Committee established the potential bonuses and earnings per
share criteria based on the Committee's judgment as to desirable financial
results for the Company and the appropriate percentage of compensation which
should be based on the attainment of such results. The bonus awards are included
in the Summary Compensation Table under "Executive Compensation and Other
Information."
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<PAGE>
STOCK OPTIONS. The Option and Compensation Committee believes that equity
participation is a key component of its executive compensation program. Stock
options are granted to executive officers primarily based on the officer's
actual and potential contribution to the Company's growth and profitability and
the practices of companies such as those included in the PPM Peer Group. Option
grants are designed to retain executive officers and motivate them to enhance
stockholder value by aligning the financial interests of executive officers with
those of stockholders. Stock options also provide an effective incentive for
management to create shareholder value over the long term since the full benefit
of the compensation package cannot be realized unless an appreciation in the
price of the Company's Common Stock occurs over a number of years.
Options to purchase the Company's Common Stock were granted to certain of
the Company's Named Executive Officers in 1996 and are reflected in the
information provided under "Compensation of Directors and Executive Officers."
These options vest cumulatively in four annual installments of 25% and expire
ten years from the date of grant. The Committee granted options based on its
judgment that the amount was appropriate and desirable considering the executive
officer's potential contribution to the Company, as well as the number of
options granted in previous years. The assessment of potential contribution was
based on the Committee's subjective evaluation of such executive officer's
ability, skills, efforts, and leadership.
COMPENSATION OF CHIEF EXECUTIVE OFFICER
Consistent with the executive compensation policy and components
described above, the Option and Compensation Committee determined the salary,
bonus and stock options received by John K. Carlyle, President and Chief
Executive Officer of the Company, for services rendered in 1996. Mr. Carlyle
received a base salary of $310,000 for 1996. The Committee did not establish a
specific target or formula to determine Mr. Carlyle's salary. The Committee
believes that this base salary was below average base salaries paid to chief
executive officers of comparable publicly traded physician practice management
companies such as those included in the PPM Peer Group. Mr. Carlyle earned an
$69,000 bonus under the 1996 Program adopted by the Option and Compensation
Committee. Mr. Carlyle was also awarded a discretionary bonus of $11,000. Mr.
Carlyle also did not in 1996 receive additional options to purchase shares of
the Company's Common Stock. The Committee determined the salary and bonus
granted to Mr. Carlyle based on its judgment that the amounts were appropriate
and desirable in light of his actual and potential contribution to the Company.
The assessment of actual and potential contribution was based on the Committee's
subjective evaluation of Mr. Carlyle's abilities, skills, efforts, and
leadership.
SUMMARY
The Option and Compensation Committee believes that the executive
compensation policies and programs described in this Report serve the interests
of the stockholders and the Company. Pay delivered to executives is intended to
be linked to, and to be commensurate with, Company performance and stockholder
expectations. We will continue to monitor the effectiveness and appropriateness
of each of the compensation components to reflect changes in the business
environment.
The Option and Compensation Committee
Robert A. Ortenzio
Paul B. Queally
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PERFORMANCE GRAPH
Set forth below is a line graph comparing the yearly percentage change in
the cumulative total stockholder return on the Company's Common Stock with the
cumulative total return of The Nasdaq Stock Market (U.S. Companies) Index and an
index of peer Nasdaq Health Services companies selected by the Company for the
period beginning May 8, 1995, and ending December 31, 1996. The comparison
assumes $100 was invested on May 8, 1995, in the Company's Common Stock and in
each of the foregoing indices and assumes reinvestment of dividends. For
purposes of the peer group index, the returns of the component issuers were
weighted according to each issuer's stock market capitalization.
OCCUSYSTEMS, INC.
[PERFORMANCE GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
-------------------------------------------------------------------
5/8/95* 12/31/95 12/31/96
<S> <C> <C> <C>
-------------------------------------------------------------------
Occusystems, Inc. $ 100 $ 143 $ 167
-------------------------------------------------------------------
Nasdaq Stock Market (U.S. Companies $ 100 $ 125 $ 154
-------------------------------------------------------------------
Nasdaq Health Services Stock $ 100 $ 139 $ 139
-------------------------------------------------------------------
*Initial public offering completed May 8, 1995
-------------------------------------------------------------------
</TABLE>
15
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the amount
and nature of the beneficial ownership of the Common Stock as of March 14, 1997,
by (i) each person known by the Company to own beneficially more than 5% of any
class of the Company's outstanding voting securities, (ii) each of the Company's
directors, (iii) each officer of the Company named in the Summary Compensation
Table under the heading "Compensation of Executive Officers," and (iv) all
current directors and executive officers of the Company as a group. Unless
otherwise indicated, the Company believes that each person or entity named below
has sole voting and investment power with respect to all shares shown as
beneficially owned by such person or entity, subject to community property laws
where applicable and the information set forth in the footnotes to the table
below.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
-----------------------
NUMBER OF
NAME SHARES (1) PERCENT
<S> <C> <C>
Putnam Investments, Inc.................. 2,075,900 9.6%
One Post Office Square
Boston, MA 02109
Pilgrim Baxter & Associates, Ltd. 1,454,700 6.7%
1255 Drummers Lane, Suite 300
Wayne, Pennsylvania 19087
John K. Carlyle.......................... 132,250 *
Stephen A. George, M.D................... 0 *
Robert W. O'Leary........................ 5,000 *
Robert A. Ortenzio....................... 34,219 *
Paul B. Queally.......................... 10,799 *
Richard D. Rehm, M.D..................... 292,938 1.3%
Daniel J. Thomas......................... 187,500 *
W. Thomas Fogarty, M.D................... 122,614 *
James M. Greenwood....................... 36,250 *
Richard A. Parr II....................... 0 *
All directors and executive officers as a
group (10) persons..................... 821,570 3.7%
</TABLE>
- ---------------------
* Less than 1%.
(1) Includes shares of Common Stock which an individual has a right to acquire
upon exercise of options or warrants or conversion of debt securities
within 60 days of December 31, 1996. Such shares are deemed to be
outstanding for the purposes of computing the percentage ownership of the
individual holding such shares, but are not deemed outstanding for purposes
of computing the percentage of any other person shown on the table.
16
<PAGE>
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors and executive officers and persons who own more than 10% of
the Company's Common Stock to file initial stock ownership reports and reports
of changes in ownership with the Securities and Exchange Commission and the
National Association of Securities Dealers, Inc. Based on a review of these
reports and on written representations from the reporting persons that no other
reports were required, the Company believes that applicable Section 16(a)
reporting requirements were complied with for all transactions which occurred in
1996, except that Mr. Parr inadvertently filed a Form 3, reporting an initial
grant of options under the Incentive Plan, late.
CERTAIN TRANSACTIONS
Richard D. Rehm, M.D., a director of the Company, is the President, a
director and a member of OHCS. The Company has entered into a 40 year management
agreement with OHCS pursuant to which OHCS provides physician services at 90 of
the Company's centers. OHCS paid approximately $86,596,000 in management fees to
the Company in 1996 under this management agreement.
STOCKHOLDER PROPOSALS
Any stockholder proposal intended to be presented at the next Annual
Meeting must be received by the Company by December 1, 1997, in order to be
considered for inclusion in the Company's proxy material for such meeting.
OTHER MATTERS
As of the date of this Proxy Statement, the Company does not intend to
bring any other matters before the Annual Meeting requiring action of the
stockholders, not does it have any information that other matters will be
brought before the meeting. However, if any other matters requiring the vote of
the stockholders properly come before the Annual Meeting, it is the intention of
the persons named in the enclosed form of proxy to vote the proxy in accordance
with their best judgment in the interest of the Company.
By Order of the Board of Directors,
Richard A. Parr II
Secretary
Dallas, Texas
April 3, 1997
17
<PAGE>
PROXY
OCCUSYSTEMS, INC.
ANNUAL MEETING OF SHAREHOLDERS-MAY 7, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints John K. Carlyle, Daniel J. Thomas and
Richard A. Parr II or any of them, with full power of substitution in each,
proxies (and if the undersigned is a proxy, substitute proxies) to vote all
Common Stock of the undersigned in OccuSystems, Inc. at the Annual Meeting
of Stockholders to be held at the Holiday Inn, 4441 Highway 114 and Esters
Boulevard, Irving, TX 75063, on Wednesday, May 7, 1997 at 1:00 p.m.
C.D.S.T., and at any adjournments thereof, as specified on the reverse
side.
(Please sign and date on reverse side of this proxy)
- ------------------------------------------------------------------------------
FOLD AND DETACH HERE
<PAGE>
<TABLE>
<CAPTION>
Please mark [X]
your vote as
indicated in
????????????
<S> <C> <C>
1. ELECTION OF DIRECTOR (INSTRUCTION: To withhold authority to vote 2. PROPOSAL TO AMEND 1995 LONG-TERM
CLASS II-TERM EXPIRING 2000 for any individual nominee, strike a line INCENTIVE PLAN TO INCREASE THE NUMBER
through the nominee's name on the list below) OF SHARES OF COMMON STOCK AUTHORIZED
FOR nominee WITHHOLD FOR AWARDS THEREUNDER.
listed to the right AUTHORITY Robert W. O'Leary
to vote for Robert A. Ortenzio FOR AGAINST ABSTAIN
nominee listed Richard D. Rehm, M.D. [ ] [ ] [ ]
[ ] [ ]
3. PROPOSAL TO RATIFY APPOINTMENT OF ARTHUR ANDERSEN, LLP AS INDEPENDENT 4. In their discretion, the proxies (and if
PUBLIC ACCOUNTANTS OF THE COMPANY FOR 1997. the undersigned is a proxy, any
substitute proxies) are authorized to
FOR AGAINST ABSTAIN vote upon such other business as may
[ ] [ ] [ ] properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE
VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED FOR THE
ELECTION OF SUCH NOMINEES FOR CLASS II
DIRECTORS AND FOR PROPOSALS TWO AND THREE.
Please sign name exactly as it appears on
the left. When shares are held by joint
tenants, both should sign. When signing as
attorney, as executor, administrator,
trustee or guardian, please give full title
as such. If a corporation, please sign in
full corporate name by President or other
authorized officer. If a partnership, please
sign in partnership name by authorized
person.
Signature__________________________________________ Title_____________________________________________ Date_______________ 1997
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED ENVELOPE.
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
FOLD AND DETACH HERE
